Mothercare sales fall again but firm says it's on track with turnaround

By

Sandra Halliday

Published
Apr 4, 2019

Mother and baby/toddler products retailer Mothercare on Thursday released a trading update and hailed the “significant strategic progress” it has made so far. Its turnaround process continues and it said its expectations for its full-year profit remain in line with what analysts are predicting.

Not that the update was brimming with good news. It seems Q4, the 12 weeks up to March 30, were tough for the firm. The company shared no information about online sales but it said that overall like-for-like sales in the period dropped as much as 8.8%, although this drop wasn’t as bad as the falls in the previous two quarters.

The ‘better’ sales story for the quarter was all about clearance stock in stores that were being closed down. While that means it’s in a better position inventory-wise, it also means that gross margins were hurt.

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The UK closure programme has proceeded relatively quickly, a fact of which some other British retailers might be envious at the moment given their own efforts to exit underperforming locations. Mothercare managed to close 40 stores in the latest quarter and now has 80 left, down from 137 a year earlier. 

And its international performance? Retail sales outside of the UK fell 4.5%, or 4.9% currency-neutral. But in ‘core’ global markets, the fall was a wider 5.7% currency-neutral as economic and trading challenges in the Middle East continued to bite.

CEO Mark newton-Jones struck a balance between caution and optimism, saying he expected conditions in the domestic market and some markets abroad to “remain challenging”. But he added that the company is starting its new financial year “in a more robust position as a restructured business fit for the future and with reduced levels of debt. We have a significantly smaller UK store estate and our international operations remain cash generative.”